Netflix shares drop as new subscriptions slow

Netflix shares took a tumble on Thursday as the streaming giant forecast lower new subscriber numbers for the start of the year than anticipated by analysts.

The company saw paid memberships increase by 8.3 million in the final quarter of 2021, bringing the total number of subscriptions up to 222 million at the end of the year.

However, the streaming service has predicted only 2.3 million new subscribers in the first quarter of 2022. During the same period of last year, there were an additional four million subscribers joining the service. According to the Financial Times, analysts had expected new subscriptions to be in line with that of 2021.

Netflix warned that while retention and engagement remain healthy, acquisition growth has “not yet re-accelerated to pre-covid levels”. The company blamed several factors, including the “ongoing Covid overhang” and macro-economic hardship in several parts of the world like LATAM.

For the full year, additional subscribers hit 18 million in comparison to 37 million new users in 2020.

“Even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world,” wrote the company. “We're continually improving Netflix so that we can please our members, grow our share of leisure time and lead in this transition.”

The business reported a 19 per cent increase to full year revenue $30 billion, while operating income jumped by 35 per cent to $6.2 billion in comparison to the previous year.

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